Moody's warns nations to cut spending or risk AAA ratings
By Howard Schneider
Washington Post Foreign Service
Tuesday, March 16, 2010
The United States and other top world economies need to make potentially painful government spending cuts or risk losing the high-grade credit ratings that have kept borrowing affordable, the Moody's rating agency said Monday.
Outlining the dilemma faced by policymakers in the United States, Great Britain, Germany and France, Moody's said that debt levels in the four large credit-worthy economies had reached the point at which they are at risk of being downgraded -- a step that would drive up interest rates, increase borrowing costs and mark a turn in perceptions about the world economy.
Economic recovery might ease the problem by increasing tax revenue, Moody's reported, but "growth alone will not resolve an increasingly complicated debt equation. Preserving debt affordability at levels consistent with AAA ratings will invariably require fiscal adjustments of a magnitude that, in some cases, will test social cohesion."
(More here.)
Washington Post Foreign Service
Tuesday, March 16, 2010
The United States and other top world economies need to make potentially painful government spending cuts or risk losing the high-grade credit ratings that have kept borrowing affordable, the Moody's rating agency said Monday.
Outlining the dilemma faced by policymakers in the United States, Great Britain, Germany and France, Moody's said that debt levels in the four large credit-worthy economies had reached the point at which they are at risk of being downgraded -- a step that would drive up interest rates, increase borrowing costs and mark a turn in perceptions about the world economy.
Economic recovery might ease the problem by increasing tax revenue, Moody's reported, but "growth alone will not resolve an increasingly complicated debt equation. Preserving debt affordability at levels consistent with AAA ratings will invariably require fiscal adjustments of a magnitude that, in some cases, will test social cohesion."
(More here.)
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1 Comments:
Bah! I believe in President Obama and Timothy Geithner and Nancy Pelosi and Harry Reid why doens't Moody's?! With this bunch in charge, we can keep the spending spigot wide open without any worry about the general economy's ability to fund the massive spending and massive debt. Obama should keep running for President as long as he wants - after all he's a 'progressive' and the Constitution is a 'living document' so he should be able to re-interpret the 22nd Amendment to ensure his perpetual re-election as long as he deems necessary. Obama is convinced of his personal divinity, so shouldn't we all to save us??
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